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Why do you think that the people that rent at market rate subsidise the people that rent below market rate?
by Ma8ee 5y ago
Why do you think that the people that rent at market rate subsidise the people that rent below market rate?
- jdavis703 5y agoDevelopers won’t build an apartment that won’t financially pencil out. Roughly speaking the developers will take whatever cost is required for IZ, and then add it to the costs of building a market rate unit. If the costs exceed the market rate, the project won’t be built because it’s unprofitable. This in turn increases the price of housing that winds up on the market (this assumes there are projects on the tipping point of penciling out vs. not). It’s essentially a tax. There’s a fair amount of research on this, here’s one paper if you’re interested in learning more: https://www.huduser.gov/portal/periodicals/cityscpe/vol23num1/ch6.pdf https://www.huduser.gov/portal/periodicals/cityscpe/vol23num...